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With Its Stock Price Down Over 80%, Cumulus Media Replaces Its Chief Executive
Its stock price plummeting, Cumulus Media, the second-largest radio broadcaster in the United States, announced on Tuesday that it would replace its chief executive.
Cumulus’s board said that Lewis W. Dickey Jr., a founder of the company, would step down as president and chief executive on Oct. 13. Mr. Dickey, one of the company’s largest shareholders, will become its vice chairman.
He is to be replaced by Mary G. Berner, the former chief executive of MPA, the Association of Magazine Media, and a former head of Reader’s Digest Association and Fairchild Publications. Ms. Berner has been on Cumulus’s board since May.
This year, Cumulus’s shares have lost more than 80 percent of their value. On Tuesday, the company’s share price closed down 8.1 percent at $0.68, its lowest price for the year.
Cumulus, based in Atlanta, has 460 stations in 90 markets — only iHeartMedia controls more stations, with over 850 — and a content syndication service, Westwood One. The company has also invested in streaming music through a deal with Rdio, a competitor to Spotify and Pandora, that is valued at $75 million and added content from Cumulus stations to Rdio’s system.
Cumulus also started a country music brand, Nash, that it extended to radio stations, TV, a magazine and a record label. In 2013, Cumulus introduced the first country station to the New York City market in 17 years, WNSH-FM, the first of a string of stations using the Nash name.
But Cumulus’s growth has resulted in a debt load of nearly $2.5 billion, and while its revenue has quickly grown since 2011 with the addition of hundreds of stations, its profitability has stagnated. Last year, it had $1.26 billion in revenue, nearly triple the $466 million taken in during 2011. But in 2014, it had only $11.8 million in net income, down from $176 million the previous year.
In a statement announcing the management changes, Jeffrey A. Marcus, Cumulus’s nonexecutive chairman, praised Ms. Berner and said she had “demonstrated an ability to turn around a company’s performance and build value for shareholders.”
Perhaps hinting at cost-cutting, he said that “maximizing the value” of its assets would require “making them work together effectively and efficiently.”
One radio executive, who spoke on the condition of anonymity, said that Mr. Marcus and Mr. Dickey had clashed over the costs of content platforms like Nash. Mr. Marcus’s firm, Crestview Partners, manages funds that own about 27 percent of Cumulus’s outstanding stock.
The management changes announced on Tuesday appeared to end a broadcasting dynasty, with both Mr. Dickey and his brother, John W. Dickey, an executive vice president, leaving their positions.
Since helping to found Cumulus in 1997, Lewis Dickey has been a familiar face in the radio business, aggressively expanding the company and pushing into new areas like streaming music. John Dickey has been a force behind building the Nash brand and working with record companies.
But ratings at some of the company’s largest stations have slid, and Cumulus has also lost broadcasting talent like Scott Shannon in New York, who went from WPLJ-FM to the oldies station WCBS-FM, said Tom Taylor, who writes a newsletter on the radio business, Tom Taylor Now.
Mr. Taylor said that Lewis Dickey had long evangelized that the radio business would benefit from more consolidation.
“He always saw himself,” Mr. Taylor said, “as one of the consolidators who would be there at the end.”
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